Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Section 3 of P.L.1977,
c.85 (C.34:13A-16) is amended to read as follows:

3. a. (1) Negotiations
between a public fire or police department and an exclusive representative
concerning the terms and conditions of employment shall begin at least 120 days
prior to the day on which their collective negotiation agreement is to expire.
The parties shall meet at least three times during that 120-day period. The
first of those three meetings shall take place no later than the 90th day prior
to the day on which their collective negotiation agreement is to expire. By
mutual consent, the parties may agree to extend the period during which the
second and third meetings are required to take place beyond the day on which
their collective negotiation agreement is to expire. A violation of this
paragraph shall constitute an unfair practice and the violator shall be subject
to the penalties prescribed by the commission pursuant to rule and regulation.

Prior to the expiration of
their collective negotiation agreement, either party may file an unfair
practice charge with the commission alleging that the other party is refusing
to negotiate in good faith. The charge shall be filed in the manner, form and
time specified by the commission in rule and regulation. If the charge is
sustained, the commission shall order that the respondent be assessed for all
legal and administrative costs associated with the filing and resolution of the
charge; if the charge is dismissed, the commission shall order that the
charging party be assessed for all legal and administrative costs associated
with the filing and resolution of the charge. The filing and resolution of the
unfair practice charge shall not delay or impair the impasse resolution
process.

(2) Whenever those
negotiations concerning the terms and conditions of employment shall reach an
impasse, the commission, through the Division of Public Employment Relations
shall, upon the request of either party, or upon its own motion take such
steps, including the assignment of a mediator, as it may deem expedient to
effect a voluntary resolution of the impasse.

b. (1) In the event of a
failure to resolve the impasse by mediation, the Division of Public Employment
Relations, at the request of either party, shall invoke factfinding with
recommendation for settlement of all issues in dispute unless the parties reach
a voluntary settlement prior to the issuance of the factfinder's report and
recommended terms of settlement. Factfindings shall be limited to those issues
that are within the required scope of negotiations unless the parties to the
factfinding agree to factfinding on permissive subjects of negotiation.

(2) Notwithstanding the
provisions of paragraph (2) of subsection a. of this section or paragraph (1)
of this subsection, either party may petition the commission for arbitration on
or after the date on which their collective negotiation agreement expires. The
petition shall be filed in a manner and form prescribed by the commission. The
party filing the petition shall notify the other party of its action. The
notice shall be given in a manner and form prescribed by the commission.

Any mediation or factfinding
invoked pursuant to paragraph (2) of subsection a. of this section or paragraph
(1) of subsection b. of this section shall terminate immediately upon the
filing of a petition for arbitration.

(3) Upon the filing of a
petition for arbitration pursuant to paragraph (2) of this subsection, an
arbitrator selected pursuant to paragraph (1) of subsection e. of this section
shall conduct an initial meeting as1a1mediation1session1to effect a
voluntary resolution of the impasse.1[The
interest arbitration process shall not proceed until 14 days following the
initial meeting.]1

c. (Deleted by amendment,
P.L.2010, c.105)

d. The resolution of issues
in dispute shall be binding arbitration under which the award on the unsettled
issues is determined by conventional arbitration. The arbitrator shall determine
whether the total net annual economic changes for each year of the agreement
are reasonable under the nine statutory criteria set forth in subsection g. of
this section and shall adhere to the limitations set forth in section 2 of
P.L.2010, c.105 (C.34:13A-16.7). The non-petitioning party, within five days
of receipt of the petition, shall separately notify the commission in writing
of all issues in dispute. The filing of the written response shall not delay,
in any manner, the interest arbitration process.

e. (1) The commission shall
take measures to assure the impartial selection of an arbitrator or arbitrators
from its special panel of arbitrators. [On
the first business day following receipt of an interest arbitration petition,] 1[Each
party shall submit three names of arbitrators from the special panel. If none
of the names submitted by each party are the same,]On the first business
day following receipt of an interest arbitration petition,1 the commission
shall, independent of and without any participation by either of the parties,
randomly select an arbitrator from its special panel of arbitrators. 1[If one name submitted
by each party is the same, that arbitrator shall be selected. If two or three
of the names submitted are the same, then the commission shall randomly select
an arbitrator from among the names submitted that were the same.]1 The
selection by the commission shall be final and shall not be subject to review
or appeal.

(2) Applicants for initial
appointment to the commission's special panel of arbitrators shall be chosen
based on their professional qualifications, knowledge, and experience, in
accordance with the criteria and rules adopted by the commission. Such rules
shall include relevant knowledge of local government operations and budgeting.
Appointment to the commission's special panel of arbitrators shall be for a
three-year term, with reappointment contingent upon a screening process similar
to that used for determining initial appointments. Arbitrators currently
serving on the panel shall demonstrate to the commission their professional
qualification, knowledge and experience, in accordance with the criteria and
rules adopted by the commission, within one year of the effective date of this
act. Any arbitrator who does not satisfactorily demonstrate such to the
commission within the specified time shall be disqualified.

(3) Arbitrators serving on the
commission's special panel shall be guided by and subject to the objectives and
principles set forth in the "Code of Professional Responsibility for
Arbitrators of Labor-Management Disputers" of the National Academy of
Arbitrators, the American Arbitration Association, and the Federal Mediation
and Conciliation Service.

(4) Arbitrators shall be
required to complete annual training offered by the State Ethics Commission.
Any arbitrator failing to satisfactorily complete the annual training shall be
immediately removed from the special panel.

The commission may suspend,
remove, or otherwise discipline an arbitrator for a violation of P.L.1977, c.85
(C.34:13A-14 et seq.), section 4 of P.L.1995, c.425 (C.34:13A-16.1) or for good
cause. An arbitrator who fails to render an award within the time requirements
set forth in this section shall be fined $1,000 for each day that the award is
late.

f. (1) At a time
prescribed by the commission, the parties shall submit to the arbitrator their
final offers on each economic and non-economic issue in dispute. The offers
submitted pursuant to this section shall be used by the arbitrator for the
purposes of determining an award pursuant to subsection d. of this section.

(2) In the event of a
dispute, the commission shall have the power to decide which issues are
economic issues. Economic issues include those items which have a direct relation
to employee income including wages, salaries, hours in relation to earnings,
and other forms of compensation such as paid vacation, paid holidays, health
and medical insurance, and other economic benefits to employees.

(3) Throughout formal
arbitration proceedings the chosen arbitrator may mediate or assist the parties
in reaching a mutually agreeable settlement.

All parties to arbitration
shall present, at the formal hearing before the issuance of the award, written
estimates of the financial impact of their last offer on the taxpayers of the
local unit to the arbitrator with the submission of their last offer.

(4) Arbitration shall be
limited to those subjects that are within the required scope of collective
negotiations, except that the parties may agree to submit to arbitration one or
more permissive subjects of negotiation.

(5) The decision of an
arbitrator or panel of arbitrators shall include an opinion and an award, and
shall be rendered within [45]90 calendar days
of the commission's assignment of that arbitrator.

Each arbitrator's decision
shall be accompanied by a written report explaining how each of the statutory
criteria played into the arbitrator's determination of the final award. The
report shall certify that the arbitrator took the statutory limitations imposed
on the local levy cap into account in making the award.

Any arbitrator violating the
provisions of this paragraph may be subject to the commission's powers under
paragraph (3) of subsection e. of this section. The decision shall be final
and binding upon the parties and shall be irreversible, except:

(a) Within [seven]14 calendar days
of receiving an award, an aggrieved party may file notice of an appeal of an
award to the commission on the grounds that the arbitrator failed to apply the
criteria specified in subsection g. of this section or violated the standards
set forth in N.J.S.2A:24-8 or N.J.S.2A:24-9. The appeal shall be filed in a
form and manner prescribed by the commission. In deciding an appeal, the
commission, pursuant to rule and regulation and upon petition, may afford the
parties the opportunity to present oral arguments. The commission may affirm,
modify, correct or vacate the award or may, at its discretion, remand the award
to the same arbitrator or to another arbitrator, selected by lot, for
reconsideration. The commission's decision shall be rendered no later than [30]60 calendar days
after the filing of the appeal with the commission.

Arbitration appeal decisions
shall be accompanied by a written report explaining how each of the statutory
criteria played into their determination of the final award. The report shall
certify that in deciding the appeal, the commission took the local levy cap
into account in making the award.

An aggrieved party may appeal
a decision of the commission to the Appellate Division of the Superior Court.

(b) An arbitrator's award
shall be implemented immediately.

(6) The parties shall share
equally the costs of arbitration subject to a fee schedule approved by the commission.
The fee schedule shall provide that the cost of services provided by the
arbitrator shall not exceed $1,000 per day. The total cost of services of an
arbitrator shall not exceed [$7,500]$10,000. If the
parties cancel an arbitration proceeding without good cause, the arbitrator may
impose a fee of not more than $500. The parties shall share equally in paying
that fee if the request to cancel or adjourn is a joint request. Otherwise,
the party causing such cancellation shall be responsible for payment of the
entire fee.

g. The arbitrator shall
decide the dispute based on a reasonable determination of the issues, giving
due weight to those factors listed below that are judged relevant for the
resolution of the specific dispute. In the award, the arbitrator or panel of
arbitrators shall indicate which of the factors are deemed relevant,
satisfactorily explain why the others are not relevant, and provide an analysis
of the evidence on each relevant factor; provided, however, that in every
interest arbitration proceeding, the parties shall introduce evidence regarding
the factor set forth in paragraph (6) of this subsection and the arbitrator
shall analyze and consider the factors set forth in paragraph (6) of this
subsection in any award:

(1) The interests and
welfare of the public. Among the items the arbitrator or panel of arbitrators
shall assess when considering this factor are the limitations imposed upon the
employer by P.L.1976, c.68 (C.40A:4-45.1 et seq.).

(2) Comparison of the wages,
salaries, hours, and conditions of employment of the employees involved in the
arbitration proceedings with the wages, hours, and conditions of employment of
other employees performing the same or similar services and with other
employees generally:

(a) In private employment in
general; provided, however, each party shall have the right to submit
additional evidence for the arbitrator's consideration.

(b) In public employment in
general; provided, however, each party shall have the right to submit
additional evidence for the arbitrator's consideration.

(c) In public employment in
the same or similar comparable jurisdictions, as determined in accordance with
section 5 of P.L.1995, c.425 (C.34:13A-16.2); provided, however, that each
party shall have the right to submit additional evidence concerning the
comparability of jurisdictions for the arbitrator's consideration.

(3) The overall compensation
presently received by the employees, inclusive of direct wages, salary,
vacations, holidays, excused leaves, insurance and pensions, medical and
hospitalization benefits, and all other economic benefits received.

(4) Stipulations of the
parties.

(5) The lawful authority of
the employer. Among the items the arbitrator or panel of arbitrators shall
assess when considering this factor are the limitations imposed upon the
employer by P.L.1976, c.68 (C.40A:4-45.1 et seq.).

(6) The financial impact on
the governing unit, its residents, the limitations imposed upon the local
unit's property tax levy pursuant to section 10 of P.L.2007, c.62
(C.40A:4-45.45), and taxpayers. When considering this factor in a dispute in
which the public employer is a county or a municipality, the arbitrator or
panel of arbitrators shall take into account, to the extent that evidence is
introduced, how the award will affect the municipal or county purposes element,
as the case may be, of the local property tax; a comparison of the percentage
of the municipal purposes element or, in the case of a county, the county
purposes element, required to fund the employees' contract in the preceding
local budget year with that required under the award for the current local
budget year; the impact of the award for each income sector of the property
taxpayers of the local unit; the impact of the award on the ability of the
governing body to (a) maintain existing local programs and services, (b) expand
existing local programs and services for which public moneys have been
designated by the governing body in a proposed local budget, or (c) initiate
any new programs and services for which public moneys have been designated by
the governing body in a proposed local budget.

(7) The cost of living.

(8) The continuity and
stability of employment including seniority rights and such other factors not
confined to the foregoing which are ordinarily or traditionally considered in
the determination of wages, hours, and conditions of employment through
collective negotiations and collective bargaining between the parties in the
public service and in private employment.

(9) Statutory restrictions
imposed on the employer. Among the items the arbitrator or panel of
arbitrators shall assess when considering this factor are the limitations
imposed upon the employer by section 10 of P.L.2007, c.62 (C.40A:4-45.45).

h. A mediator, factfinder,
or arbitrator while functioning in a mediatory capacity shall not be required
to disclose any files, records, reports, documents, or other papers classified
as confidential received or prepared by him or to testify with regard to
mediation, conducted by him under this act on behalf of any party to any cause
pending in any type of proceeding under this act. Nothing contained herein
shall exempt such an individual from disclosing information relating to the
commission of a crime.

(cf: P.L.2010, c.105, s.1)

1[2. Section 2 of P.L.2010,
c.105 (C.34:13A-16.7) is amended to read as follows:

2. a. As used in this
section:

"Base salary" means
the salary provided pursuant to a salary guide or table and any amount provided
pursuant to a salary increment, including any amount provided for longevity or
length of service. It also shall include any other item agreed to by the
parties, or any other item that was included in the base salary as understood
by the parties in the prior contract. Base salary shall not include non-salary
economic issues, pension and health and medical insurance costs.

"Non-salary economic
issues" means any economic issue that is not included in the definition of
base salary.

b. An arbitrator shall not
render any award pursuant to section 3 of P.L.1977, c.85 (C.34:13A-16) which,
on an annual basis, increases base salary items by more than 2.0 percent of the
aggregate amount expended by the public employer on base salary items for the
members of the affected employee organization in the twelve months immediately
preceding the expiration of the collective negotiation agreement subject to
arbitration; provided, however, the parties may agree, or the arbitrator may
decide, to distribute the aggregate monetary value of the award over the term
of the collective negotiation agreement in unequal annual percentages. An
award of an arbitrator shall not include base salary items and non-salary
economic issues which were not included in the prior collective negotiations
agreement.

c. Notwithstanding the
provisions of subsections a. and b. of this section, base salary shall include the
savings realized by a public employer as a result of:

(1) increased employee
contributions toward health and medical insurance premiums occurring in the
fourth year, and pursuant to, sections 39, 40, 42, and 44 of P.L.2011, c.78
(C.52:14-17.28c; 52:14-17.28d; 40A:10-21.1; and 40A:5A-11.1) and section 80 of
P.L.2011, c.78; except if the increase in the employee contributions toward
health and medical insurance premiums are not in the fourth year at the time of
the new collective bargaining agreement, base salary shall include the savings
realized in the most recent year of implementation of increased employee
contributions toward health and medical insurance premiums; and

(2) a reduction in force
which occurred prior to the expiration of the collective negotiations agreement.

In the case of savings
realized by a public employer under paragraphs (1) or (2) of this subsection, an
arbitrator may render an award which increases base salary items by more than
2.0 percent, but not more than 3.0 percent.

(cf:
P.L.2010, c.105, s.2) ]1

12. Section
3 of P.L.2010, c.105 (C.34:13A-16.8) is amended to read as follows:

3. a.
There is established a task force, to be known as the Police and Fire Public
Interest Arbitration Impact Task Force.

b. The
task force shall be comprised of eight members as follows:

(1) four
to be appointed by the Governor;

(2) two
to be appointed by the Senate President; and

(3) two
to be appointed by the Speaker of the General Assembly.

c. All
appointments shall be made within 30 days of the effective date of P.L.2010,
c.105 (C.34:13A-16.7 et al.). Vacancies in the membership shall be filled in
the same manner as the original appointments. The members of the task force
shall serve without compensation but may be reimbursed, within the limits of
funds made available to the task force, for necessary travel expenses incurred
in the performance of their duties.

d. (1)
The task force shall organize as soon as is practicable upon the appointment of
a majority of its members and shall select a chairperson from among the
appointees of the Governor and a vice chairperson from among the appointees of
the Legislature. The Chair of the Public Employment Relations Commission shall
serve as non-voting executive director of the task force.

(2) The
task force shall meet within 60 days of the effective date of P.L.2010, c.105
(C.34:13A-16.7 et al.) and shall meet thereafter at the call of its chair. In
furtherance of its evaluation, the task force may hold public meetings or
hearings within the State on any matter or matters related to the provisions of
this act, and call to its assistance and avail itself of the services of the
Public Employment Relations Commission and the employees of any State
department, board, task force or agency which the task force determines
possesses relevant data, analytical and professional expertise or other
resources which may assist the task force in discharging its duties under this
act. Each department, board, commission or agency of this State is hereby
directed, to the extent not inconsistent with law, to cooperate fully with the
task force and to furnish such information and assistance as is necessary to
accomplish the purposes of this act. In addition, in order to facilitate the
work of the task force, the Public Employment Relations Commission shall post
on its website all collective negotiations agreements and interest arbitration
awards entered or awarded after the date of enactment, including a summary of
contract or arbitration award terms in a standard format developed by the
Public Employment Relations Commission to facilitate comparisons. All
collective negotiations agreements shall be submitted to the Public Employment
Relations Commission within 15 days of contract execution.

e. (1)
It shall be the duty of the task force to study the effect and impact of the
arbitration award cap upon local property taxes; collective bargaining
agreements; arbitration awards; municipal services; municipal expenditures;
municipal public safety services, particularly changes in crime rates and
response times to emergency situations; police and fire recruitment, hiring and
retention; the professional profile of police and fire departments,
particularly with regard to age, experience, and staffing levels; and such
other matters as the members deem appropriate and necessary to evaluate the
effects and impact of the arbitration award cap.

(2) Specifically,
the task force shall study total compensation rates, including factors subject
to the arbitration award cap and factors exempt from the arbitration award cap,
of police and fire personnel throughout the state and make recommendations
thereon. The task force also shall study the interest arbitration process and
make recommendations concerning its continued use in connection with police and
fire labor contracts disputes. The task force shall make findings as to the
relative growth in total compensation cost attributable to factors subject to
the arbitration award cap and to factors exempt from the arbitration award cap,
for both collective bargaining agreements and arbitration awards.

f. The
task force shall report its findings, along with any recommendations it may
have, to the Governor and the Legislature annually [,
on or before April 1 of each year]. The task force's final report due on or before [April
1, 2014]December
31, 2017 shall include, in addition to any other
findings and recommendations, a specific recommendation for any amendments to
the arbitration award cap. Upon the filing of its final report on or before [April 1, 2014]
December 31, 2017, the task force
shall expire.1

(cf:
P.L.2010, c.105, s.3)

3.
Section 4 of P.L.2010, c.105 (C.34:13A-16.9) is amended to read as follows:

4. This act shall take
effect January 1, 2011; provided however, section 2 of P.L.2010, c.105 (C.34:13A-16.7)
shall apply only to collective negotiations between a public employer and the
exclusive representative of a public police department or public fire
department that relate to 1[a]1 negotiated 1[agreement]agreements1 expiring on [that effective date]1[April 2, 2014]that effective date1 or any date
thereafter until [April
1, 2014] 1and
including1December 31, 2017, whereupon 1after
December 31, 20171
the provisions of section 2 of P.L.2010, c.105 (C.34:13A-16.7) shall
become inoperative for all parties except those whose collective negotiations
agreements expired 1[on or after April 2,
2014 but]1
prior to 1or
on1[April 1, 2014
but]December
31, 2017 1[and]but1 for whom a final
settlement has not been reached. 1[When final settlement
between the parties in all such negotiations is reached, the provisions of section
2 of [this act]P.L.2010, c.105 (C.34:13A-16.7)
shall expire. In the case of a party that entered into a contract that expires
on [the effective
date of this act or any date thereafter until April 1, 2014]April 2, 2014 or any
date thereafter until December 31, 2017, and where the terms of that
contract otherwise meet the criteria set forth in section 2 of [this act]P.L.2010, c.105 (C.34:13A-16.7)
that party shall not be subject to the provisions of section 2 of P.L.2010,
c.105 (C.34:13A-16.7) when negotiating a future contract.]1